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Air France-KLM: With a hybrid debt difficulty, Air France-KLM wants to find some planes with Brussels

(BFM Bourse) – The Air Transport Group introduced on Wednesday the issuance of 300 million euros of hybrid debt securities with a attainable 7% dilution. The quantity of this difficulty can be earmarked for reimbursement of state help. The group faces the danger of a strike at Air France this winter and shares fell on the Paris inventory alternate.

Air France-KLM continues to plan its flights to overcome restrictions imposed by the European Commission. To get out of the Brussels-imposed chokehold – which prevents it, for instance, from taking greater than 10% of one other firm’s capital – the Franco-Dutch air transport group should repay 75% of the mixed quantity of each 3 billion euros in super-subordinated debt securities of the French state. And about 600 million distributed by Paris to enhance the capital of the group within the spring of 2021. So far the corporate is at 60%.

It is to get nearer to the 75% mark that Air France-KLM introduced on Wednesday the launch of a proposal of hybrid debt securities, specifically end-ranked subordinated bonds of indefinite period, convertible into new shares. and/or exchangeable for present shares, for an quantity of 300 million euros.

The whole proceeds of this difficulty will thus be devoted to repaying the super-subordinated debt securities of the State.

Stock drops

These bonds can be issued in par, with a nominal worth of 100,000 euros and can be convertible and/or exchangeable into new and/or present Air France-KLM shares, the corporate mentioned. The remaining phrases of the bond needs to be decided at this time and settlement-delivery of the bond ought to happen on November 23, 2022, Air France-KLM mentioned.

These bonds will carry a nominal rate of interest of between 5.75% and 6.5% till November 2025. “From November 23, 2025 (inclusive), the bonds will bear curiosity at a price equal to 1,300 foundation factors. [13%, NDLR] above the relevant mid-swap price for 3 years in euros as a reference price,” the corporate mentioned.

This hybrid debt difficulty can also be synonymous with potential liquidity for Air France-KLM holders. The air transport firm estimates that beneath sure assumptions, significantly if it decides to difficulty new shares completely through the conversion, this liquidation will characterize roughly 6.8% of the excellent share capital.

On the Paris bourse, Air France-KLM shares surprisingly greeted the announcement with a enhance, falling 11.8% at 11:15 a.m.

“This announcement reminds the market that different transactions of this kind are probably to happen within the coming months,” mentioned Stephen Furlong, analyst at Davy. When releasing its third-quarter outcomes, Air France-KLM really warned that it might difficulty up to 1.2 billion euros in hybrid debt in 2022 and 2023. The state of affairs in Poland”, he added.

“In addition to the announcement of the issuance of hybrid debt securities, the danger of a strike at Air France through the Christmas interval additionally weighs on the transfer”, estimates Yi Zhong, analyst at analysis workplace unbiased AlphaValue.

Notice of strike for Christmas interval

Two flight crew unions, the Civil Aviation Flight Crew Union (UNAC) and the Air France Group Flight Crew Union have filed strike notices for the interval from December 22 to January 2. In query, a dispute over the collective settlement of hostesses and stewards.

“This discover should function a warning to our administration,” the 2 unions’ press releases defined. “If this warning shouldn’t be heeded, solely a sturdy coalition can be in a position to tip the scales,” he added.

In a assertion despatched to a number of media shops, together with BFM Bourse, Air France mentioned it had learn the discover and was stunned about the identical discover “whereas a new negotiation for the renewal of the PNC contract is underway. [Personnels navigants commerciaux, NDLR] PNC representatives have been engaged with the union since late September and can proceed past January 2023”.

“Air France administration has already dedicated, all through the negotiation section, to be sure that all provisions governing the lives of cabin crew members stay unchanged. Air France will proceed the dialogue as all the time,” the corporate continued.

Julien Marion – ©2022 BFM Bourse

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